Federal Acquisition Regulation (FAR) Update—New Rules

On May 1, 2018, the General Services Administration (GSA) published FAC 2005-98 in the Federal Register, covering a number of FAR Cases with Final Rules effective May 31, 2018. The online version of the FAR (www.acquisition.gov) will not be updated until May 31, 2018.

FAR Case 2017-007, Task-and-Delivery Order Protest; Final Rule, effective May 31, 2018. This Final Rule amends FAR Part 16 and implements § 835 of the National Defense Authorization Act (NDAA) for Fiscal Year 2017 (P.L. 114-328), which raises the protest threshold for task and delivery orders from $10 million to $25 million. According to GAO, there are fewer than 10 protests per year of procurements between $10 million and $25 million, the higher threshold for protests of task or delivery orders for DoD, NASA, and the Coast Guard will result in savings for GAO and the affected Executive branch agencies, because there will no longer be protests of orders valued between $10 million and $25 million based on dollar value.

FAR Case 2017-004, Liquidated Damages Rate Adjustment, Final Rule, effective May 31, 2018. This Final Rule amends FAR Parts 22 and 52 and implements the U.S. Department of Labor (DOL) interim final rule published in the Federal Register July 1, 2016, and the final rule published in the Federal Register on January 18, 2017, and subsequent adjustments for inflation pursuant to the Federal Civil Penalties Inflation Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act of 2015. The final rule specifically addresses violations and liability for unpaid wages (overtime) under the Contract Work Hours and Safety Standards Statute.

FAR Case 2015-039, Audit of Settlement Proposals, Final Rule, effective May 31, 2018. This final rule to amends FAR Part 49 to raise the dollar threshold requirement for the audit of prime contract settlement proposals and subcontract settlements from $100,000 to align with the threshold for obtaining certified cost or pricing data, which is $750,000. This final rule impacts contractors subject to audits of their termination settlement proposals and eliminates termination settlements audits between $100,000 and the threshold for obtaining certified cost or pricing data, currently $750,000. Contractors will save costs associated with the preparation and support for the termination settlement audits. This will also enable faster final settlement payments to contractors, thereby improving contractor cash flow.

FAR Case 2017-008 (Item II), Duties of the Office of Small and Disadvantaged Business Utilization (OSDBU), Final Rule, effective May 31, 2018. This final rule amends FAR Part 19 to reflect sections of NDAA 2017, P.L. 114-238, amends § 15(k) of the Small Business Act to provide additional duties for OSDBUs. These additional duties also apply to DOD Offices of Small Business Programs. NDAA § 1812, § 1813, § 1821 of the NDAA for FY 2017 amend section 15(k) of the Small Business Act to add duties for OSDBUs and OSBPs.

Section 1812 of the NDAA for FY 2017 amends the Small Business Act to specifically reference the existing duties of OSDBUs and OSBPs with respect to the various small business programs and consolidation of contract requirements. Section 1812 also requires OSDBUs and OSBPs review summary purchase card data for acquisitions above the micro-purchase threshold (e.g., $3,500)*, but below the simplified acquisition threshold (e.g., $150,000)*, to ensure these acquisitions are compliant with the Small Business Act and have been properly recorded in the Federal Procurement Data System (FPDS). The revision to the FAR reflecting section 1812 of the NDAA includes flexibility for each OSDBU or OSBP to identify the best purchase card data available to their agency when implementing the statutory requirement. *Note: The micro-purchase and simplified acquisition thresholds were raised by NDAA 2018 to $10,000 and $250,000, respectively. A final rule has not been implemented (FAR Case 2018-004), but agencies have been authorized to implement Class Deviations to begin using the new thresholds before the Final Rule is promulgated (see Civilian Agency Acquisition Council Letter No 2018-03, dated February 16, 2018)

Paragraph (a) of section 1813 requires OSDBUs and OSBPs to provide assistance to a small business prime contractor or subcontractor in finding resources for education and training on compliance with the FAR after award of their contract or subcontract.

Paragraph (b) of section 1821 requires OSDBUs and OSBPs to review all required small business subcontracting plans to ensure that they provide maximum practicable opportunity for small business concerns to participate as subcontractors.

Currently, acquisition-related duties of OSDBUs and OSBPs are found in FAR 19.201, General policy. The duties found in FAR 19.201 are based on the duties found in section 15(k) of the Small Business Act (15 U.S.C. 644(k)). Additional OSDBU and OSBP acquisition-related duties enacted before the NDAA for FY 2017 listed at 15 U.S.C. 644(k), which were not previously updated in the FAR, are also included in this rule.

Additionally, this rule revises the OSDBU and OSBP duty at FAR 19.201(c)(5), which relates to increasing small business participation in solicitations that involve bundling. This revision reflects that OSDBUs and OSBPs perform much broader functions under those scenarios than what is currently listed in the FAR.

FAC 2005-98 contains GSA’s introduction to the FAC, as well as the Small Entity Compliance Guide required by § 212 of the Small Business Regulatory Enforcement Fairness Act of 1996.

About the Author:

Wayne SimpsonConsultant
Wayne Simpson is retired from the U.S. Department of Veterans Affairs (VA) after 38 years of federal service. He served as the Executive Assistant to VA’s Deputy Assistant Secretary for Acquisition and Logistics where he was the primary staff advisor to the Deputy Assistant Secretary, who serves concurrently as VA’s Senior Procurement Executive and Debarring Official.

I am just now seeing your article above. I have a question regarding the threshold changes you reference. The Government has issued several relevant documents, including at least these:
1) The NDAA for FY2018, signed 12/12/2017, increased the thresholds for micro-purchases (to $10,000 from $5,000 DOD/$3,500 civilian agencies) and simplified acquisitions (to $250,000 from $150,000).

2) But guidance from the OMB Compliance Supplement, dated 4/1/2018, indicated that “The provisions of the NDAA of 2018 will not be effective until they are codified in the Federal Acquisition Regulation. If auditors determine auditees have early implemented the provisions of the NDAA of 2018 for the increased simplified acquisition and micro-purchase thresholds, they are expected to develop audit findings for noncompliance caused by this early implementation.”

3) The DOD issued a Class Deviation 2018-O0013 memo on 4/13/2018, citing an increase for the DOD micro-purchase threshold to $5,000, and moving the threshold to $10,000 for certain entities.

4) On the non-DoD side, the GSA Office of Governmentwide Policy issued a ‘Class Deviation from the FAR increasing micro-purchase and simplified acquisition thresholds’ on 2/16/2018 to the higher thresholds, effective immediately and until the FAR is updated.

5) And OMB issued a Memo entitled ‘Implementing Statutory Changes to the Micro-Purchase and the Simplified Acquisition Thresholds for Financial Assistance’ on 6/20/2018 in which it indicated “OMB is granting an exception allowing recipients to use the higher thresholds…The exception takes effect (today). Agencies should apply this exception to all recipients.”

So, my question is this: Are government contractors now authorized to go to the higher thresholds OR do we need to wait until the FAR is someday finally updated?

Centre thanks you for your comment. I’m not sure this change mandated by NDAA 2017 disproportionately impacts and affects small businesses. Given there are only about 10 protests a year between $10 million and $25 million, I would suspect most of those were lodged by large businesses. My experience with companies I have worked with is task orders at those dollar levels are generally pursued by large (other than small) business as they are most frequently the holders of the IDIQ contracts with values approaching and exceeding those dollar thresholds, which requires equal access under FAR Part 16, with the exception of set-asides of course. It is clearly the intent of the legislation to speed up the procurement process by reducing protests of task and delivery orders below $25 million. I know over the years DOD was frustrated by the frequency of these protests. As passed and implemented, this change applies to both DOD and Civilian Agency acquisitions. Best wishes for every continued success in the Federal Marketplace. – Wayne Simpson